Attorney General seeks court action on WNMU president's severance

This story has been updated to include a statement from Western New Mexico University.

By the time New Mexico Attorney General Raúl Torrez petitioned a court earlier this week to block a $1.9 million severance payment for Western New Mexico University’s outgoing president, Joseph Shepard, the sum had already been paid.

In a press conference on Thursday, Torrez said the payment was made on Jan. 2, as the university’s entire governing board stepped down and while the state Department of Justice sought answers about a severance agreement unanimously enacted by regents in December. The action voided a previous, less generous severance clause in the president’s contract. 

“We do not yet know who is responsible for ordering or directing the financial staff at Western New Mexico to go forward with processing the payment,” Torrez said at the podium, “but I can assure you that we will take every available measure to get to the bottom of how that decision was made, who made the decision, and how that process unfolded.”

Shepard had announced his resignation in the wake of a scandal over spending and financial mismanagement at the Silver City-based university. 

Now, Torrez said he would ask the court to prevent Shepard from spending the funds and order them placed into a constructive trust until legal claims over the handling of public funds at the university are adjudicated.

Torrez alleged the university had been slow to respond to his office’s requests for documents underpinning the agreement to pay Shepard nearly $2 million in severance and grant him a faculty appointment paying $200,000 annually with an eight-month sabbatical.

The generous terms came in spite of a scathing letter of concern from the state auditor in November over mishandling of university purchase cards and lavish spending on international travel, hospitality and fine dining, by Shepard and the regents themselves. Auditors found that the university had even issued a P-card to Shepard’s spouse, Valerie Plame, though she was not an employee. 

The New Mexico State Ethics Commission is conducting its own investigation into the matter.

Questions about Shepard’s spending first arose in a 2023 investigative report by Searchlight New Mexico, with more coming to light as lawmakers and the state auditor probed the situation. 

In a civil complaint, the DOJ alleges Western’s board drafted and negotiated a separation agreement behind closed doors, then met in open session to terminate Shepard’s 2022 contract and enact the separation agreement at a Dec. 20 public meeting. Under his contract, the severance would instead have been just under $600,000, per court filings.

The complaint alleges the entire board of regents were in breach of their fiduciary duty to safeguard public money, entered into an unconscionable contract, violated the state Constitution’s anti-donation clause in awarding the severance and conducted business in private unlawfully. Shepard, also named as a defendant, is accused of unjust enrichment. 

Shepard’s attorney responded with a statement rebuffing the allegations. 

“His personal frustrations aside, the Attorney General is too talented and too experienced of a lawyer to believe he has any legitimate claim against Dr. Shepard,” attorney John C. Anderson wrote. “Western New Mexico University’s Board of Regents has the responsibility and legal authority to negotiate and approve executive compensation and severance agreements.  The Board appointed a subcommittee to negotiate Dr. Shepard’s separation agreement and then unanimously voted to approve it. 

“This entire process was handled appropriately, legally, and transparently. Dr. Shepard did not expedite his payment. Any allegations to the contrary have no legal or factual basis. The state’s time would be better spent helping the university focus on its important work of educating and supporting its students during this transition.”

Outside of court, Torrez said he would work with lawmakers, who return to Santa Fe Jan. 21, on statutory reforms to how regents – political appointments by the governor – are selected, their powers to award contracts and severance agreements and easing the process of removing regents if they are in breach of their duties. 

Standing with Torrez at the podium was New Mexico House Speaker Javier Martinez, who indicated change was overdue. 

“This is about safeguarding the money of the people of the state of New Mexico, and this is about ensuring that no one is above the law,” Martinez said. “These are public institutions funded through the tax dollars of taxpayers. In this particular case … a public institution in an otherwise pretty impoverished part of our state.”

The university responded with a statement Thursday afternoon that the severance agreement approved on Dec. 20 stipulated it would be paid no later than Jan. 15. 

"The University was planning to make the payment on the same day the agreement was approved. However, the president asked that payment be delayed until January 2, 2025," the statement read. "WNMU’s holiday break was scheduled December 23, 2024, through January 1, 2025. When the offices reopened on January 2, 2025, the payment was processed as a part of regular accounting processes."

The statement concluded: "Western New Mexico University’s legal counsel has been in regular contact with the Attorney General’s office and has been cooperative to provide documents and insight."